Mall space sees decline of 70% in SL markets: JLL

International property consultancy Jones Lang LaSalle (JLL) on Monday said that mall space has seen a decline of 70 per cent due to various factors.

According to a report, “Refreshingly Sri Lanka – An island of retail opportunity”, though the retail market in Colombo is growing rapidly and stronger than in any other markets in Sri Lanka, the mall space showed a sharp decline.

Gagan Singh, CEO, Business (India) & chairperson, Sri Lanka Operations, Jones Lang LaSalle said, “Analysing the retail scenario in Colombo based on various factors such as individual household expenditure, tourist’s expenditure and along with the existing mall stock and future malls supply, we found Colombo’s retail real estate is not growing as quick as the retail sector in the city. Based on our study, the total mall space required in Colombo is around 2.4 million sq. ft, while the actual mall stock available today is about 0.7 million sq. ft, declining by about 70 per cent.”

With a weak mall supply for the next five years the shortage of mall space in Colombo will continue to remain at around 70 per cent until 2017.

“The size of the Sri Lankan retail market is estimated at between $25 billion and $30 billion, out of which organised players represent only 3 per cent,” said Singh, adding that this offers growth opportunities for both global and domestic retailers in Sri Lanka.

Political and economic stability and major internationally funded infrastructural development have made Sri Lanka one of the most promising new real estate markets in the Asia Pacific region. Retail, in particular, is riding high on its impressive economic growth, which has increased the country’s per capita income from $2,014 in 2008 to $2,923 in 2012.

However, Anuj Puri, chairman & country head, Jones Lang LaSalle India said, “The rising living standards of Sri Lankans are changing their spending patterns and preferences towards more quality branded goods and services. Colombo has witnessed the great development of organised retail establishments in its up-market locations. Given the current trend in organised retail and brand presence, there is significant scope for enhancing targeted retail capacity in upcoming residential locations.”

Sri Lanka has several potential retail hotspots, such as Colombo, Gampaha, Kandy, Kalutara, Galle, Kurunegala and Matara. Colombo reigns supreme in the country’s overall retail potential — however, the lack of mall space and quality high street properties —hinders the expansion of both international and domestic retailers.